Risk Solutions, Inc' Overview Of Services And Capabilities

1
Longfellow Benefits' Webinar Reengineering your
Property/Liability/Workers Compensation
Insurance Program   This Webinar will address the
following key benefits         Present
strategies to save money   Identify key coverage
issues         "Tricks of the trade" 
Discuss processes that you can use to
improve your program from a cost and
process standpoint We are pleased to offer a
webinar with a forum for discussion and QA.
  Speaker John Blassick , President, Risk
Solutions Inc.   Moderator Patrick Haraden,
CEBS, CLU, ChFC, REBC, RHU - Longfellow
Benefits, Senior Vice President, Employee
Benefits To take advantage of this opportunity,
please register below. Thursday, September 18,
2008  100 p.m. - 200 p.m. EST REGISTER
NOW Please note if you do not receive an
email confirmation within 24 hours after you
register. Please check your junk mail folder.
2
Agenda/ Overview

• Current state of Property Casualty Marketplace
• Key Coverages Issues
• Premiums/ Loss Saving Strategies
• Tricks of the Trade
• RFP Process
• Questions?

2
3
Market Overview

• No significant catastrophic losses such as
  hurricanes or September 11th events. As a result,
  insurers have earned record profits
• Record profits have resulted in competition among
  insurers and brokers
• Exception- property located in coastal areas
• Directors and Officers- Financial Institutions
• Professional Liability- Financial Institutions
• Brokerage Firms Consolidation
• Willis taking over HRH

3
4
Key Coverage Issues

• Property
• Business Income/ Extra Expense (time element)?
• Selecting the appropriate limit
• Identify Key Suppliers/ Customers
• Watch for sublimits!
• Property of others in your control/ possession
• Property/ Inventory at temporary or unscheduled
  locations
• Property under construction/ renovation
• Property/ Inventory in transit
• Tenant improvement and betterments

4
5
Key Coverage Issues

• Liability
• Watch the exclusions! Typically, exclusions
  should fall into one of four categories. If they
  do not, question your broker
• Losses that can not be measured (depreciation)?
• Losses that are uninsurable (Nuclear disaster/
  War)?
• Losses that are covered by other policies
  (automobile liability excluded by a general
  liability policy)?
• Losses against public policy/behavior (arson,
  fraud)?
• Punitive Damages- insurability

5
6
Key Coverage Issues

• Workers Compensation
• Decide whether or not to exclude Officers/
  Directors
• Watch for incidental coverage issues
• Foreign travel
• Long Shore Men benefits
• Travel to or from Ohio/ Washington/ West
  Virginia/ Wyoming

6
7
Key Coverage Issues

• Executive Risk- Try to negotiate
• Full severability of exclusions/ knowledge
• Non-rescindable policy
• Limit the definition of application to no
  longer than one spec
• Amend the definition of claim to include a
  notice of circumstance
• Employment Practice Liability
• Decide whether or not to include independent
  contractors
• Private company Directors Officers Liability-
  be careful, coverage may not be worthwhile, look
  at number of shareholders, bank agreements, etc.
  A number of exclusions restrict coverage.

7
8
Premium/ Retained Loss Savings Strategies

• Soft Market- negotiate rate reductions
• Leverage good loss experience/ Market poor loss
  experience
• Remove the bad or undesirable risks
• Rethink autos as a perk
• Lease rather than own property
• Consider a captive
• Network within any associations you may belong
  to, identify trends within your industry
• If seeking competitive quotes or proposals, give
  yourself at least 90 days
• For DO renewals, give yourself 30-45 days after
  an earnings announcement

8
9
Premium/ Retained Loss Savings Strategies

• DO- If a public company, have a dialogue with
  your underwriters in both good and bad times
• Verify the workers compensation experience
  modification rating
• Self insured loss plans
• Make sure your broker has a qualified claims
  specialist. These specialists can reduce claims
  and impact your net profit more than premiums
• Consider hiring a Third Party Claims
  Administrator (TPA)?
• Conduct claim audits and verify best practices
  are being followed

9
10
Tricks of the Trade

• If satisfied with your broker and insurer,
  negotiate savings in exchange for not soliciting
  competitive quotes
• Use off renewal dates- Avoid beginning or end
  of calendar quarters. Underwriters have more time
  and will be more interested in quoting your
  business
• Consider placing your broker on a fee rather than
  a commission
• Typical range of fee commissions
• Workers Compensation- 3-5
• All others- 10-15

10
11
Tricks of the Trade

• Broker Fees
• Limit to no more than 8-10 of premium, excluding
  workers compensation premium
• Consider pay-for-performance fees linked to your
  business goals
• Premium/ Loss Reduction
• New program structures/ concepts
• Quality of deliverables
• Conduct a RFP proposal every three to five years
• For Directors and Officers Liability renewals,
  allow 30-45 days after an earnings report

11
12

13
RFP Options to Consider

• Option I Market Allocation
• Select brokers
• Assign specific insurance companies to each
  broker
• Prepare specifications (minimum coverage
  requirements, underwriting data, loss
  information, etc.)?
• Release RFP to brokers
• Evaluate proposals based on
• net premium cost
• breadth of coverage
• services proposed
• financial stability of insurance carriers

13
14
RFP Options to Consider

• Option I Market Allocation
• Advantages
• Program cost is known
• Most potential markets are contacted
• Coverage enhancements are known
• Disadvantages
• Often end up with wrong broker right market or
  vice versa
• Brokers lose leverage with markets, this process
  will not result in the lowest cost
• Broker with the lowest premium may not be the
  best provider of services
• Insurance company with lowest premiums may have
  a poor claims
• management/loss control services
• Due to the nature of your products and services,
  there will be a limited
• number of competitive insurance markets
• Little/no opportunity for pay-for-performance
  compensation matrix

14
15
RFP Options to Consider

• Option II - Broker Conceptual Process
• Review your program and identify your goals and
  expectations
• Prepare RFP (include your goals and objectives,
  underwriting data, loss history, etc.)
• Select Brokers
• Evaluate proposals based on
• Premium savings/Cost avoidance
• Proposed service fees, including contingency
  revenue
• Proposed coverage enhancements
• Service capabilities -claims management
• Broker aligns with RSI client's growth and long
  term strategy
• Proposed pay-for-performance criteria
• Benchmarking capabilities

15
16
RFP Options to Consider

• Option II Broker Conceptual Process
• Advantages
• Selected broker has access to all markets (has
  greater leverage)?
• Identify all sources of revenue for the broker
• Identify highest potential premium savings/cost
  avoidance
• Identify broker that demonstrates the best
  understanding of your specific goals and
  servicing requirements
• Broker is compensated based on quantifiable and
  measurable value provided to RSI Client.
• Disadvantages
• Premium savings are not finalized. However, if
  broker does not deliver proposed savings, their
  compensation will be reduced.

16
17
RFP Process Overview/Timeline (Broker
Conceptual)?
July

• Identify current program strengths and weaknesses
• Determine program improvement opportunities
• Validate RSI client goals objectives and time
  table
• Gather critical data for RFP
• Incorporate objectives into RFP
• Pricing targets
• Coverages
• Service expectations
• Identify potential insurance brokers

August

• Send out RFP to brokers
• Answer broker questions/requests for additional
  info
• Develop broker scoring matrix
• Evaluate written proposals

September-October

• Select brokers for oral presentations
• Hold on site oral presentations
• Evaluate oral presentations

October-December

• Resolve any proposal issues
• Provide recommendation to senior management
• Notify successful bidder
• Finalize broker service agreement
• Broker begins marketing new program
• Review insurance proposal

17